If it's a PS/2 device then I'm pretty sure I know what the problem is.
On many new motherboards, there's something commonly called "keyboard standby power". This means that the motherboard keeps power to the PS/2 port so that the computer can be woken with a "sleep" key on the keyboard.
The problem is that some PS/2 devices like the keyboard encoder in your X-Arcade don't like it when the power stays on like that.
The solution is to look for a small jumper on your motherboard, usually near the PS/2 port, labeled something like "kbsbp" or "kb stand by" or "+5v KB". Or it might not be labelled clearly at all and you might need to dig up a manual to find the jumper.
That's assuming there *is* a jumper at all. Some motherboards don't give you a choice and do not provide a jumper to turn that feature off.
GroovyMAME support forum on BYOAC